POSTED: Tuesday, February 21, 2012 - 3:33pm
UPDATED: Tuesday, February 21, 2012 - 3:59pm
More than $5 million paid by unsuspecting Americans was obtained through a fraudulent collections scam operating out of India for the past two years. This was according to a Federal Trade Commission press release posted Monday. The release stated that a U.S. district court has halted an operation allegedly collecting “phantom” payday loan debts the consumers did not owe by harrassing the victims with threats of immediate arrest and jail time.
The FTC said millions of collection calls were placed from India since January 2010. Victims’ contact information was somehow obtained from consumers’ online applications for high-interest, short-term payday loans, according to the FTC investigation. The operation was allegedly run by American companies, who were outsourcing the call center in India.
The public release revealed the defendants often pretended to be law enforcement or government authorities from the “Federal Department of Crime and Prevention” demanding more between $300 to $2,000 at a time. At other times, the callers said they were filing a large lawsuit against the consumer because of the delinquent payday loan or would have the consumer fired from his or her job.
The FTC said the victims never owed any money either because the payday loans never existed, or the defendants had no authority to collect since they were owed to another company. The court order stops the illegal conduct and freezes the operation while the investigation moves forward.
“This is a brazen operation based on pure fraud, and the FTC is committed to shutting it down,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Consumers should not be pressured into paying debt they don’t remember owing. Legitimate debt collectors must provide consumers with both written information about the debt, and instructions for protecting themselves if they don’t think they owe the debt.”
As part of its continuing crackdown on scams that target consumers in financial distress, the FTC charged Villa Park, California-based American Credit Crunchers, LLC, an affiliated company called Ebeeze, LLC, and the companies’ owner, Varang K. Thaker, with violating the FTC Act and the Fair Debt Collection Practices Act.
Over the last two years, consumers have filed more than 4,000 complaints with the FTC and state attorneys general about fraudulent debt collection calls.
According to the FTC’s complaint, Thaker obtained information – often including Social Security or bank account numbers – about consumers who had inquired about, applied for, or obtained online payday loans. Thaker worked with telephone callers in India who called consumers using deceptive statements and threats to convince them to pay debts that were not owed or that he was not authorized to collect, the FTC alleged.
Court documents reveal Thaker had withdrawn tens of thousands of dollars from the American Credit Crunchers and Ebeeze bank accounts, the FTC alleged.
For more information about how to handle callers who claim to be debt collectors, see Who’s Calling? That Debt Collector Could Be a Fake.